4.3 Property, plant and equipment
Cost
Property, plant and equipment for our own use are initially recognized at acquisition or production cost and are subsequently measured at acquisition or production cost less accumulated depreciation and any accumulated impairment losses.
When the construction and start-up of non-current assets require a substantial period of time, the borrowing costs incurred over that period are capitalized. In 2017, 2016 and 2015 no material borrowing costs were capitalized.
The costs of expansion, modernization or improvements leading to increased productivity, capacity or efficiency or to a lengthening of the useful lives of the assets are capitalized. Repair, upkeep and maintenance expenses are recognized in the consolidated income statement for the year in which they are incurred.
Mineral reserves are recorded at fair value at the date of acquisition. Depletion of mineral reserves is computed using the units-of-production method utilizing only proven and probable reserves (as adjusted for recoverability factors) in the depletion base.
Property, plant and equipment in the course of construction are transferred to property, plant and equipment in use at the end of the related development period.
Depreciation
The Company depreciates Property, plant and equipment using the straight-line method at annual rates based on the following years of estimated useful life:
|
|
|
Years of |
|
|
|
Estimated |
|
|
|
Useful |
|
|
|
Life |
|
Properties for own use |
|
25-50 |
|
Plant and machinery |
|
8-20 |
|
Tools |
|
12.5-15 |
|
Furniture and fixtures |
|
10-15 |
|
Computer hardware |
|
4-8 |
|
Transport equipment |
|
10-15 |
Land included within Property, plant and equipment is considered to be an asset with an indefinite useful life and, as such, is not depreciated, but rather it is tested for impairment annually. The Company reviews residual value, useful lives, and the depreciation method for Property, plant and equipment annually.
Environment
The costs arising from the activities aimed at protecting and improving the environment are accounted for as an expense for the year in which they are incurred. When they represent additions to property, plant and equipment aimed at minimizing the environmental impact and protecting and enhancing the environment, they are capitalized to non-current assets.